Govt saves USD 1.54 bn in first year of fertiliser DBT implementation: MSC study

The government has saved USD 1.54 billion (about Rs 10,800 crore) in the first year of implementation of the direct benefit transfer (DBT) scheme for fertilisers, said a study released on Thursday.

The fertiliser DBT has boosted transparency by real-time tracking of the movement, requirement, and availability of stocks. It has also improved supply while easing record-keeping and paperwork, it added.

Under fertiliser DBT, which was rolled out in October 2017, the government remits the subsidy to fertiliser companies only after retailers have sold the fertiliser to farmers through Aadhaar-based authentication.

The Union fertiliser ministry and the Niti Aayog commissioned global firm MicroSave Consulting (MSC) to conduct a study to evaluate implementation of the fertilisers DBT, ascertain system efficiency, identify challenges, and provide actionable solutions.

"In its first year of operations, DBT-fertilisers saved the Government of India USD 1.54 billion (as per government estimate)," the MSC said in statement.

The consulting firm also said the study findings showed instances of manual sales without Aadhaar and "adjusted" transactions fell from 21 per cent in the third round of evaluation to 13 per cent in the current round.

Adjusted transactions are those that retailers often undertake without verifying the farmers' credentials, only to update their records later, it said.

The MSC conducted four rounds of evaluation from 2016 -- during the pilot phases until 2018 -- when the programme was rolled out nationwide. The quantitative research was done with 1,182 retailers and 11,281 farmers across 18 states and 54 districts in the country.

According to the study, the retailers adjusted transactions when a farmer's Aadhaar was not available at the time of fertiliser purchase or in cases where the Aadhaar authentication failed.

Moreover, retailers often did not ask farmers for their Aadhaar number to purchase fertiliser and simply sold it by manually adjusting the transactions later. The primary reason for this was to minimise transaction time during peak sales periods, it added.

Among Aadhaar-authenticated transactions, the study showed 86.6 per cent were successful on the first attempt. Overall, successful Aadhaar authentication in three attempts increased to 99 per cent in the current round from 97 per cent in the third round of evaluation.

That apart, the study also found that the average time it takes for a transaction through point-of-sale (PoS) devices improved from four to five minutes in the third round of the evaluation to three to four minutes in the current round.

The government had increased the server capacity by deploying new servers to improve the transaction time.

Besides, retailer training and awareness efforts that the government and fertiliser companies undertook are laudable.

Of the total retailers surveyed, 90 per cent received at least two training sessions. Of these retailers, 83.1 per cent stated that the training was sufficient to understand the features and operations of the PoS device.

According to the study, the majority of farmers (75 per cent) and retailers (59 per cent ) preferred the DBT system to the previous manual system of fertiliser distribution since it has improved supply while easing record-keeping and paperwork.

Under the fertilises DBT system, retailers can also use the Aadhaar-enrolment ID along with the Kisan Credit Card (KCC) or Electoral Photo ID Card (EPIC) to authorise the sale if a farmer has not yet received an Aadhaar number after enrolling for it.

Unlike the previous system, where the government paid the subsidy after production and dispatch of fertiliser, farmers under the fertilisers DBT system may purchase any quantity of subsidised fertilizer regardless of the land size they possess or cultivate.

The government provides about Rs 70,000 crore as fertilisers subsidy annually.